Daily Brief Energy/Materials: Kum Yang Co Ltd, Idemitsu Kosan, Ecopro Co Ltd, Pidilite Industries, Gibson Energy, Electrovaya, Lepidico Limited, Sibanye-Stillwater and more

• The review period for the March rebalance of the KOSPI Size Indices ends 28 February. The results will be announced early March and implemented at the close on 9 March.
• We see 5 migrations between MidCap and LargeCap, 8 migrations from SmallCap to MidCap, 3 new adds to MidCap, and 11 migrations from MidCap to SmallCap.
• Stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.

• On 14 February 2023, Idemitsu Kosan (5019 JP) reported Q3 results. They were less impressive than one would have hoped. 
• Lower USDJPY and lower Dubai crude prices mean a JPY 90bn hit to inventory marks, but the rest of the petro business made almost no money in the quarter. 
• However, the company announced a large buyback. THAT is worth looking at. 

• Ecopro Co Ltd (086520 KS) is one of the likely inclusions in the MSCI Korea rebalance in May 2023.
• Many investors have pushed up share price of Ecopro Co, already factoring in that this stock will be included in the next round of MSCI Korea index rebalancing.
• Our NAV analysis of Ecopro Co suggests an implied NAV per share of 207,087 won, representing a 5% upside from the current price. 

• In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the June 2023 Rebalance.
• The sharp price drops experienced by the Adani Group companies have resulted in a negative change in index flow expectations for some names.
• However, some Adani Group companies could be experiencing positive index flows in the June 2023 rebalance due to some peculiar derivative-linkage requirements in the index methodology.

• Gibson Energy’s revenues for 2021 increased to c$7.2bn recording a major percentage spike of 46.03% com- pared to revenues of 2020.
• Similar uptrend showed the main profitability indicators in 2021 (EBT, EATAM).
• Partial or total lifting of restrictive measures across the global economy in 2022 as well as an ongoing energy crisis, contributed to an increase in oil demand, setting the company on track to achieve record high profitability.

• Revenue rose 527.3% Y/Y to $7.8 million from $1.2 million in 1Q22. The increase in revenue was due to increased order volume and the ramp-up in production to meet demand. 
• Revenue was predominantly from the sale of batteries for Material Handling Electric Vehicles (MHEVs), which accounted for $7.4 million or ~96% of revenue for 1Q23 compared with $1.1 million or ~89% for 1Q22.
• The sale of engineering services, research grants, and other sources of revenue accounted for the remaining $0.4 million or 4% in 1Q23 compared with $0.1 million or 11% in 1Q22.

Since our last note on the company, Lepidico has successfully completed extensive further pilot plant trials at larger scale, raised over A$19m in equity, updated and improved the economics of its Phase 1 Plant project and updated and upgraded its mineral resources (and reserves) at Helikon 4 and on surface (in the form of dumps etc) at both Rubicon and Helikon. This note updates our valuation of the company for all of these developments plus new lithium price assumptions (below).

• Sibanye Stillwater Limited’s stock presents a tactical investment opportunity to traders after its significant month-over-month drawdown.
• Financial market participants could soon start pricing the prospects of self-generation.
• A recovery of the company’s U.S. PGM operations and ending South African wage strikes will likely deliver tangible results.